Correlation Between Travelers Companies and Apptech Corp

Can any of the company-specific risk be diversified away by investing in both Travelers Companies and Apptech Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Travelers Companies and Apptech Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Travelers Companies and Apptech Corp, you can compare the effects of market volatilities on Travelers Companies and Apptech Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Travelers Companies with a short position of Apptech Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Apptech Corp.

Diversification Opportunities for Travelers Companies and Apptech Corp

-0.25

Correlation Coefficient

Travelers Companies  Apptech Corp

Very good diversification

The 3 months correlation between Travelers and Apptech is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Apptech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apptech Corp and Travelers Companies is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Travelers Companies are associated (or correlated) with Apptech Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apptech Corp has no effect on the direction of Travelers Companies i.e., Travelers Companies and Apptech Corp go up and down completely randomly.

Pair Corralation between Travelers Companies and Apptech Corp

Considering the 90-day investment horizon The Travelers Companies is expected to under-perform the Apptech Corp. But the stock apears to be less risky and, when comparing its historical volatility, The Travelers Companies is 1.63 times less risky than Apptech Corp. The stock trades about -0.15 of its potential returns per unit of risk. The Apptech Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  95.00  in Apptech Corp on February 3, 2024 and sell it today you would lose (6.00) from holding Apptech Corp or give up 6.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Travelers Companies  vs.  Apptech Corp

The Travelers Companies

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Travelers Companies is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Apptech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apptech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Travelers Companies and Apptech Corp

The main advantage of trading using opposite Travelers Companies and Apptech Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, Apptech Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Apptech Corp will offset losses from the drop in Apptech Corp's long position.

The idea behind The Travelers Companies and Apptech Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.